The spread of heterochromatin is crucial for heritably silencing large regions of the genome and consequently for generating and maintaining cell identity during development. Illegitimate gene activation from loss of heterochromatin spread is strongly linked to invasive breast cancers while illegitimate gene silencing from aberrant heterochromatin spread is strongly linked to myeloid leukemias. In addition to gene silencing, heterochromatin plays crucial roles in recombination and chromosome segregation. At the core of the most conserved form of heterochromatin is the complex formed between HP1 proteins and chromatin methylated on lysine 9 of histone H3 (H3K9me3). The following key roles have been attributed to HP1 proteins in heterochromatin function: (1) The HP1-nucleosome complex is hypothesized to recruit effector molecules to H3K9me3 chromatin. Paradoxically, effectors that both, enable as well as restrict further heterochromatin spread are recruited. The balance between these opposing activities is thought to dictate the functions and stability of the assembled heterochromatin. (2) HP1 proteins are hypothesized to directly mediate the spread of heterochromatin by oligomerizing across multiple nucleosomes. (3) HP1 proteins are hypothesized to condense chromatin and thereby directly reduce the access of DNA to the transcription machinery. Despite the centrality of these properties to the in vivo functions of heterochromatin, the molecular basis for how HP1 accomplishes these roles is poorly understood. We have made the new discovery that Swi6, the major S. pombe HP1 isoform, switches from an auto-inhibited state to a spreading-competent state in a manner that depends on recognition of H3K9me3 and additional features of a nucleosome. We will build on these and additional results to address the following questions in the S. pombe model system: (i) how do HP1 proteins interact with different effectors, (iii) why do different HP1 isoforms have different functions, (iii) how do HP1 proteins spread across chromatin, and (iii) what does HP1 assembly do to chromatin structure? We will use a combination of quantitative biochemical methods and cutting edge electron cryo-microscopy approaches. We will also test key predictions of our models in vivo.